Natural gas futures continued to chop sideways Tuesday as traders appeared hesitant to bet too heavily one way or the other while a major hurricane spins in the Eastern Atlantic and fresh storage data is scheduled for release Thursday. The futures market rebounded modestly as weak shorts covered their Monday afternoon sales. The October contract closed at $4.73, recouping 6.9 cents of the 11 cents it lost in trading on Monday.

According to the National Hurricane Center, Hurricane Isabel was becoming a little better organized as she plodded slowly toward the West/Northwest across the vast Atlantic Ocean. Although the cyclone remains days away from the islands in the western Atlantic and Caribbean, she is getting a fair amount of attention based solely on her 135 mph winds and category 4 ranking (out of 5) on the Saffir-Simpson scale.

By comparison, Hurricane Andrew, which like Isabel developed off the coast of Africa, reached category 5 status packing 160 mph winds before it plowed into South Florida in August 1992. Andrew re-emerged in the Gulf of Mexico and was ultimately responsible for 15 deaths, $25 billion in damage and the removal of an estimated 2.75 Bcf/d in gas supply for several weeks late that summer.

To be sure, it is premature to suggest that Isabel could buck the odds and take a similar path. Still, the possibility looms and traders were especially weary of shorting the market Tuesday, sources said.

Also keeping traders guessing is this week’s storage report, which will be released at 11:15 a.m. Thursday in order to accommodate 9/11 observances at Nymex. Early expectations call for a 80-105 Bcf refill, which would easily exceed the 74 Bcf injection from a year ago, the 68 Bcf five-year average and the 70 Bcf injection released last week. In 2001, the market injected a whopping 97 Bcf. “A build of 85 Bcf would exceed the five-year average by 25% and continue to place inventories on track to reach the 3,000-3,050 Bcf range,” wrote Kyle Cooper of Citigroup. His final estimate is for a 95-105 Bcf refill.

However, Jay Levine of New Hampshire-based Advest Inc. questions to what degree have the bearish storage numbers already been factored into prices. “How much is already built into prices is open to interpretation. Maybe it’s a seeing is believing thing — waiting for the actual release — but I gotta believe large injections are, to a large extent, built in.,” he wrote in a note to clients Tuesday.

A Washington DC-based broker agrees and notes that bears are fighting right now against the market’s seasonal tendency to move higher. “The momentum is to the upside. As long as we can remain above the $4.55 level, this market has the ability to move up,” she advised.

NYMEX and EIA schedule for Sept. 11: In observance of the anniversary of the World Trade Center tragedy and in remembrance of the 21 members and former members that perished, the New York Mercantile Exchange will delay the opening of open outcry trading this Thursday from 10 a.m. ET until 10:51 a.m. ET. Trading and clearing on Nymex’s electronic systems will be closed during that period. In response to Nymex’s late opening Thursday, the EIA announced Friday that it will delay the release of its Weekly Natural Gas Storage Report from 10:30 a.m. ET to 11:15 a.m. ET.

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